Ian Lindgren

Hi, I think that it’s very important to realise that the readers of these forums actually take everyone’s posts as advice; in fact they often take them as fact and make life decisions based on them. You have posted two very incorrect and misleading posts on PomzinOz and Perth Poms at: http://www.pomsinoz.com/forum/news-chat-dilemmas/142388-lafha-some-advice-needed-2.html#post1360141 http://www.perthpoms.com/forum/migration-issues/6003-oh-offered-457-bunbury-what-do-4.html#post31377 You should not be defensive when you make an error; rather you should correct it. Let’s dissect the situation so readers can read fact and make fact based decisions and I’ll post the same information on both forums. You have made the statement about LAFHA that “The scheme always assumed that it was to help people that were coming to Oz for a short term stay and were having to maintain a household back in their home country.” This is incorrect and I’ll cite the former section 51A of the Income Tax Assessment Act 1936 (ITAA 1936) where in 1945 it was amended to state that the amount of any LAFHA was an allowable deduction from the assessable income of an employee taxpayer. The nature of a LAFHA was set out in the Explanatory Note as “Various wage-fixing authorities have granted away-from-home allowances to employees whose places of employment are located away from their usual places of abode. The allowance is paid to compensate the employee for the additional expenditure he is obliged to incur in providing board and accommodation for himself at his place of employment while, at the same time, maintaining his home elsewhere. So it is incorrect to suggest that LAFHA was introduced as a scheme to assist people that were coming to Oz for a short term stay and were having to maintain a household back in their home country. So we are clear on that and can leave it behind because in 1945 through to the 1970s Australia did not have to subsidize people living in Australia. Instead they subsidized people getting to Australia when they had homes elsewhere because people were flocking here in waves and happily leaving their homes behind with the European migrations from places like Italy and Greece after WWII and 10 Pound Poms (no disrespect intended, my Wife is a 10 Pound Pom!) as part of Ben Chifley’s 1945 Populate or Perish" policy. How LAFHA became to apply to foreign citizens occurred in November 1993 when the ATO issued Draft Taxation Determination TD 93/D275 to supplement MT 2030 (the primary LAFHA Guide) by providing additional guidelines in relation to how an employee’s ‘usual place of residence’ could be determined. You have also made the statement that the vast majority on LAFHA are people are regarding the move to Australia as a permanent move. This is wrong. We have conducted 4,562 LAFHA Assessments in five and a half years, and of that 22.3% decided to remain in Australia and lost LAFHA and 71.5% returned home (and therefore kept LAFHA while in Australia) and 6.2% went to other countries after their visa expired. You have also said that LAFHA will end on 1 July and when I indicated that this is incorrect you stated “Ok, technically, it hasn’t become law yet. But it is almost certainly going to be law by July 1st." I recommend doing a Google search for the Treasury Consultation Paper on LAFHA dated 29 Nov 2011, and you will find that LAFHA is not going to end. Therefore you are wrong. In fact so wrong that I can advise you that until recently temporary ceasing our LAFHA services until things become clearer, we had assessed 54 people in 2012 who had moved to Australia from overseas and been required to move by their employer after obtaining a home in Australia. Out of the 54 people 28 chose to leave their families at the place they are now, and move just by themselves to the new temporary location. These people will be eligible for LAFHA now and if the new laws are passed because they will maintain two properties. So you are wrong; LAFHA will not end for foreign citizens, nor Australians. Now I’ve been a bit harsh here because I dislike misinformation, so I’ll slip into my advisory role. LAFHA will continue past 1 July 2012; I do not agree with the changes because in my opinion the government has changed the eligibility criteria for the allowance without thought of the impact on the thousands of people it allowed to be employed in Australia on the understanding that they would receive it. See the LAFHA Blog for the current un-emotive facts. I like a good debate and I respect your point of view that “The reason is simple (that LAFHA will cease). It is up to an employer to pay the staff correctly and not for the taxpayer to subsidise the employer. If the skills affected are in such short supply, then the employer will be happy to pay for them.” Our Government subsidises a whole raft of issues that many people have a view that they might be worthy or nor worthy, but they are subsidised nonetheless, from new Mums with the Baby Bonus, to car manufacturing so we keep jobs, so as I say you are welcome to your view that the government should not subsidise employers. As an employer myself I receive no subsidies, but I provide LAFHA advice to employers who will have great difficulty competing locally without LAFHA, such as panel beaters who cannot get panel beaters in Australia, to landscape gardeners who cannot get landscape gardeners in Australia to media consultants and of course nurses, doctors IT people and so on. These are the people whose jobs are at risk when you say that employers “should just pay them properly” when in fact we are subsidising them as a result of a skills shortage so they can help Australia and live here at a decent level of living as a result of having to perhaps maintain a home back home and one in Australia, keep furniture overseas, educate their children in Australia or overseas and for reasons such as because they don’t get free education or Medicare in the way that a permanent resident does if they are on a 457 Visa. Just as an aside….are you a permanent resident or an employer? Anyway, just to finish. LAFHA will continue past 1 July, some foreign citizens already meet the proposed changes, I respect your view on subsidising foreign citizens, but do not agree with it because I think Australia should assist. Regards, Ian

I think the federal government has been very short sighted on this and will not only be hurting foreign citizens, who we badly need in our country due to the skills shortage, but also Australians because contrary to what the government is saying, most Australians who receive LAFHA will also lose it on 1 July. The current legislation versus the proposed changes and real time facts on the changes can be found at the LAFHA Blog. Regards, Ian

The best thing to do is assume that you are not going to receive LAFHA. The current legislation versus the proposed changes and real time facts on the changes can be found at the LAFHA Blog. Regards, Ian

Hi Cal, Does your OH rent a property in Sydney for the time he is away? Does he keep it in his name when he is not there? I tell you what, why don’t your log on to our web site and send an email to us and describe the whole situation in full. Go to http://www.payme.com.au/contact-details.html#online-enquiry, and then we can advise if it is LAFHA, or Travel Allowance that he should be claiming? By the way, we have just released a LAFHA Blog that contains all the real time information on LAFHA. Regards, Ian

Always a pleasure to help, but no, there is no date set by the Government to give any of us any firm information. There is however starting to be a lot of lobbying against it, but I would not hold my breath. Regards, Ian

Hi, Good question, and you are correct; there is no use approaching your HR department for any more information. This is the case because the Government has not released anything other than to say that LAFHA is likely to change on 1 July 2012 as such: You will first need to own or rent a property in Australia, Then be required to move temporarily by your employer, and while away, maintain your original house, ie not sublet it. Then rent a property in the temporary location. BUT, this is yet to become law, BUT, it is very likely to be in place by 1 July! However to quote the Government’s working paper: The following classes of taxpayer will not be affected by the reforms: permanent residents receiving LAFH benefits that can be substantiated; employees operating under fly‐in fly‐out arrangements within Australia; and employees of community sector organisations who are not currently using all of their FBT exemptions cap. So we won’t know until anything further is released; no one will. And for FIFO workers, it is likely to only be the person flying in and out that receives the allowance, and only when they are on site, and only if their employer does not pay for food and accommodation. All LAFHA benefits the family currently receive would appear to be lost after 30 June 2012. I hope this has helped in some way. Regards, Ian

Hi Huey, Under the current LAFHA guidleines, it is very probable you would be eligibe and might be able to receive up to $200 more in your hand each week until 30 June 2012. However after 30 June 2012 you would not be eligible if the governments proposed changes are placed into law. Have aread of the attached employers brief on LAFHA and I am sure that will answer a lot of your questions. Regards, ian LAFHA Information for Employers brief.pdf LAFHA Information for Employers brief.pdf